Corporate Governance and Its Impact on Firm Performance: An Emerging Market Perspective

Abstract

With an emphasis on important factors such as board independence, diversity, ownership concentration, and audit quality, this study investigates how corporate governance practices affect business success in emerging markets. The descriptive statistics revealed that the average board independence in the sample firms was 54.7%, while ownership concentration averaged 42.3%, suggesting a moderate degree of shareholder control. Correlation analysis demonstrated a positive relationship between board independence and Tobin’s Q (r = 0.42, p < 0.01), and between audit quality and ROA (r = 0.35, p < 0.05). Regression analysis further confirmed that audit quality significantly improved ROA (β = 1.15, p < 0.01) and that board independence and diversity were key contributors to Tobin’s Q (β = 0.28 and 0.16, respectively). The ownership concentration negatively impacted profitability (β = -0.08, p < 0.05). These findings emphasize the importance of balanced governance structures in enhancing both financial performance and market valuation. The study offers useful advice for emerging market companies and regulators on how to manage ownership arrangements, improve audit quality, and create independent and diverse boards to support long-term performance.